WASHINGTON—A former top Boeing executive received a four-month prison sentence and a $250,000 fine Friday for illegal job negotiations with an Air Force official who oversaw contracts with Boeing.
The scandal derailed a $20 billion defense program and triggered a broader review of Pentagon contracts.
Former Chief Financial Officer Michael Sears, 57, was Boeing's third-ranking executive when he approached Darleen Druyun, the Air Force's No. 2 weapons buyer, about working for Boeing in the fall of 2002.
At the time, Druyun was negotiating a Boeing proposal to provide the Air Force with 100 refueling tankers, a proposal that collapsed under the weight of scandal.
Druyun is serving a nine-month prison sentence for her role in the job talks. Comments she made to federal investigators have prompted a broader review of contracts she negotiated with Boeing and other defense contractors, and Sears' willingness to bend federal rules in pursuit of defense deals is spurring a wider review of how Pentagon officials and defense contractors do business.
"The actions of Michael Sears and Darleen Druyun are striking examples of the fraud and corruption that is present too often in the government contracting system," U.S. prosecuting attorney Paul McNulty said.
McNulty said he was assembling a "fraud working group" to promote early detection and prevention of procurement fraud in defense companies, especially in the relationships between Pentagon officials and contractors.
Several agencies, including the FBI and several federal inspectors general, will coordinate the fraud investigation, McNulty said.
Whether the probe would be limited to former Pentagon officials who took jobs in private industry or would also include officials who took positions on corporate boards—such as former Pentagon procurement chief E.C. "Pete" Aldridge, who went straight from the Air Force to the board of Lockheed Martin in 2003—was unclear Friday.
The heart of the government's case against Sears, who once was considered a likely future chief executive officer of Chicago-based Boeing Co., was a secret October 2002 meeting between Sears and Druyun in Orlando, Fla., in which Sears discussed job terms with Druyun, who was involved in tanker negotiations at the time.
Sears pleaded guilty in November to one felony count of aiding illegal employment negotiations.
"You are a person who had everything, and in the blink of an eye jeopardized everything," federal Judge Gerald Bruce Lee told Sears at the packed sentencing hearing in Alexandria, Va.
Defense lawyers said Sears had a one-time lapse of judgment and should get a probation sentence. Prosecutors argued that his conduct was part of a pattern of disregard for federal rules meant to prevent conflict of interest.
Prosecutors said they were especially disturbed by the apparent tolerance that senior Boeing officials had for Sears' behavior. They said a prison sentence was necessary to deter other executives from considering similar crimes.
In a presentencing statement, prosecutors noted that after Sears reported his secret meeting with Druyun to Boeing colleagues, they "did not confront the obvious legal and ethical issues presented by these employment negotiations."
Rather, the prosecutors said, Boeing's top leaders "appear to have accepted the negotiations as business as usual."
Sears said he took full responsibility for the decision, which he acknowledged was wrong.
Congress approved the Boeing tanker plan and President Bush signed it before the Druyun-Sears negotiations became public.
Questions surrounding the program also have claimed the jobs of Air Force Secretary James Roche and chief procurement official Marvin Sambur and contributed to the resignation of Boeing's then-CEO, Phil Condit, in 2003.
Tanker replacement plans are on hold pending several studies. Any plan that passes Congress probably will result in a new round of competition between Boeing and rival Airbus, which has exploited the delay to advance its own efforts to provide tankers to the Air Force.
Boeing officials have been trying to use the sentencing to put the company's ethics problems behind them.
In an e-mail to employees Friday, Boeing Chief Executive Officer Harry Stonecipher said he was "sick" to think of the pain Sears and Druyun had caused the company, but that the sentencing helped Boeing "move toward restoring our reputation."
Last week Stonecipher predicted that Boeing could settle its differences with the government soon after the sentencing, though prosecutor McNulty said he was "just not going to go down that road" in any wide-ranging settlement with the company. He also wouldn't rule out further criminal charges against Boeing or any of its employees.
Several past Air Force negotiations by Druyun involving Boeing and other contractors are under federal review.
On Friday the Government Accountability Office sustained a complaint filed by Boeing defense rival Lockheed Martin, recommending that a new competition for a small-diameter bomb contract be held because of Druyun's improper influence in awarding that contract to Boeing.
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(c) 2005, Knight Ridder/Tribune Information Services.
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